Advantage 1 Is the Economy

Advantage 1 is the Economy

New Environmental Regulations Make It Impossible For Coal to Compete in the Current Market

McCullough 3/5/2013 (Mark, Executive Vice President American Electric Power, AMERICAN ENERGY SECURITY AND INNOVATION; ¶ COMMITTEE: HOUSE ENERGY AND COMMERCE; ¶ SUBCOMMITTEE: ENERGY AND POWER¶ THE NEED FOR REVOLUTIONARY TECHNOLOGY DEVELOPMENT, CQ Congressional Testimony, lexis)

The specifics of EPA’s recently proposed NSPS standards for new EGUs further support our concerns that the CAA is not the proper vehicle to address GHG emissions. The proposed regulations do not represent a balanced or cost-effective solution. For example, EPA has taken the extraordinary step of combining two separate well-established NSPS source categories that set different standards for different fuels for all other types of emissions, and proposed a single NSPS limit for CO2 emissions that applies to all new fossil-fueled EGUs from those two categories.5 The proposal requires that both new coal-fueled and natural gas-fueled EGUs meet a CO2 emissions limit of 1,000 pounds per megawatt-hour (lb/MWh). AEP believes that the proposed regulations are inconsistent with the CAA because they fail to establish standards that can be achieved regardless of the fuel used (a so-called “fuel neutral” standard). Instead, for the first time, EPA has proposed to set one, uniform, performance standard for all sources within the combined EGU source category that is potentially achievable only by units burning fuels with the lowest inherent emissions (i.e., natural gas).6¶ Under the proposed regulations, all new baseload and intermediate demand fossil-fueled EGUs would have to achieve an emission rate equivalent to EPA’s estimate of the emission rate achievable at a new natural gas combined cycle unit. However, due to different fuel characteristics, plant designs, and operational considerations between coal and natural gas power plants, a coal-fueled power plant cannot meet a CO2 emission rate equivalent to natural gas without some form of technology capable of reducing CO2 from the power plant emissions. This proposed regulation is instead fuel discriminatory in that it prevents the construction of any new coal-fueled units without a defined, plausible plan for CCS implementation. CCS is not currently commercially available or economically viable at this time, as described later.

Means No New Plants Absent Incentives For Commercialization

Ken Silverstein, Contributor 3/13/2013 @ 8:46AM Coal To Gas Moves Are Generating Economic Waves http://www.forbes.com/sites/kensilverstein/2013/03/13/coal-to-gas-moves-are-generating-economic-waves/

All utilities that own and operate coal-fired fleets must decide whether to retire or to retrofit their aging plants, many of which were built in the 1950s. Multiple federal regulations are now in the pipeline and involve mercury, coal ash and greenhouse gases. That will result in the closing of a cadre of coal plants and the construction of numerous combined-cycle natural gas facilities.¶ “Our analysis shows that switching to cleaner energy sources and investing in energy efficiency often makes more economic sense than spending billions to extend the life of obsolete coal plants,” says Steve Frenkel, director of the Union of Concerned Scientists‘ Midwest office. “Regulators should require utility companies to carefully consider whether ratepayers would be better off by retiring old coal plants and boosting electricity generation from natural gas and renewable energy sources like wind.”¶ Spending billions to upgrade old coal plants is unwise, he continues, saying that as much as 18 percent of the nation’s coal portfolio should be mothballed. That equates to 353 generators in 31 states.¶ While the industry is hoping for delay, action will ultimately be inevitable. Standard & Poor’s says that a third of coal plants are working to comply. Utilities such as Exelon Corp. and PSEG Corp. began ditching their older generators in the 1990s and replacing them with cleaner alternatives.¶ But the ratings agency says that two-thirds of the existing U.S. coal fleet is older than 30 years and must either be retired or retrofitted. The older and smaller facilities are better candidates for closure while the newer and bigger coal plants could be modernized. Coal now supplies about 40 percent of the electricity here while natural gas comprises about 30 percent, says the Energy Information Administration. That could rise to 40-50 percent in 20 years.¶ Coal is responsible for about a third of all carbon dioxide emissions. It also releases double the other pollutants regulated by the Clean Air Act that include sulfur dioxide and nitrogen oxide. When combusted, natural gas produces roughly half the emissions as does coal. But it, too, has its critics who say that the exploration methods are harmful and that more of the national treasure should be invested in sustainable energy.¶ Several utilities have recently announced that they would retire their older coal-fired plants and replace them with those that burn natural gas. The decisions are predicated on federal and state environmental laws as well as prior court cases, not to mention the relative cheap price of natural gas.¶ Georgia Power, a subsidiary of Southern Company, is retiring 2,000 megawatts of fossil-fired generation. Altogether, it will be shedding 15 coal and oil facilities. Five years ago, the parent’s fuel mix consisted of 70 percent coal but now it is 47 percent. That coal configuration will fall further unless technologies that would capture and bury carbon are commercialized.

Two Internal Links to the Economy

First Is Coal Production

Even Conservative Estimates Show That the Phase Out of Coal Collapses The Economy

Fred Upton Chair of the Energy and Commerce Committee in the House of Representatives November 30, 2012 NAM STUDY: EPA Regulations Will Drive Up Manufacturing Costs, Cripple Economic Recovery http://energycommerce.house.gov/blog/nam-study-epa-regulations-will-drive-manufacturing-costs-cripple-economic-recovery

A new study released this week by the National Association of Manufacturers finds major new EPA rules could cost manufacturers hundreds of billions of dollars and eliminate millions of American jobs. The study examines the cumulative impact of EPA’s new layers of red tape that are burdening job creators with high costs and driving up energy prices. The authors warn EPA’s actions will prohibit job creation and investment and could cripple our economic recovery.¶ The report analyzes the cumulative cost of new major EPA rules affecting our nation’s power sector, including the Utility MACT Rule, the Boiler MACT Rule, the Coal Ash Rule, the Coal Combustion Residuals Rule, the Cooling Water Intake Structures Rule, the Cross-State Air Pollution Rule, and the anticipated new National Ambient Air Quality Standards for Ozone.¶ The report finds compliance costs for the six regulations could total up to $111.2 billion by EPA estimates and up to $138.2 billion by industry estimates. Total capital expenditures are projected at $174.6 billion to $539.3 billion according to EPA data and from $404.5 billion to $884.5 billion according to industry.¶ “EPA’s expansion of red tape is strangling job creators and American consumers at a time when they can least afford it. This report offers further evidence that EPA’s policies will hinder our economic recovery and the growth of American manufacturing,” said Energy and Power Subcommittee Chairman Ed Whitfield (R-KY). “Rather than burdening American businesses with high compliance costs and uncertainty, we need commonsense policies that will foster investment and help bring manufacturing jobs back to America.”¶ The Energy and Commerce Committee has been leading the fight against EPA’s regulatory assault on jobs and affordable energy during the 112th Congress. Advancing bipartisan legislation like the Energy Tax Prevention Act, the TRAIN Act, the EPA Regulatory Relief Act, and the Coal Residuals Reuse and Management Act, the committee has offered commonsense solutions to shield job creators and American families from EPA’s costly new rules and destructive overreach.

That Spills Over to All Sectors

Steve Goreham January 2, 2013 “Lisa Jackson leaving EPA and path of economic destruction”

http://communities.washingtontimes.com/neighborhood/climatism-watching-climate-science/2013/jan/2/lisa-jackson-leaving-epa-and-path-economic-destruc/

Lisa Jackson, President Obama’s chief of the Environmental Protection Agency, resigned last week. For four years she led our nation down a regulatory path of economic destruction unmatched in the 40-year history of the EPA. New regulations from Jackson’s reign of terror affect power plants, industrial plants, refineries, and vehicles, as well as the cost of almost all goods and services. Unless her policies are rolled back, Americans will pay for decades with higher energy prices, job losses, and economic stagnation in exchange for negligible environmental benefits.¶ In January 2008, during his first presidential campaign, President Obama stated, “So if somebody wants to build a coal-fired plant they can. It’s just that it will bankrupt them because they’re going to be charged a huge sum for all that greenhouse gas that’s being emitted.” When cap-and-trade legislation failed in Congress in 2010, Jackson became Obama’s instrument to destroy the US coal-fired utility industry.¶ President Obama and Lisa Jackson put faith in Climatism, the belief that man-made greenhouse gases are destroying the planet. They trust people like NASA scientist James Hansen, who has characterized coal plants as “factories of death.” Therefore, any and all means must be used to eliminate coal plants and other greenhouse gas sources.¶ Since 2009, the EPA has pursued limits on greenhouse gas emissions. In July 2012, the EPA proposed a limit of 1,000 pounds of carbon dioxide emissions per megawatt of electricity generated for new plants. This limit would prevent construction of coal plants unless “carbon capture” is used, an unproven and expensive technology.¶ The EPA’s Cross-State Air Pollution Rule (CSAPR) was finalized in July 2011, seeking new stringent reductions in sulfur dioxide and nitrogen oxide emissions from power plants. Since 1970, US emissions of sulfur dioxide and nitrogen dioxide have fallen by 56 percent and 40 percent respectively, and continue to fall to low parts-per-billion levels, even though electricity output from coal is higher. But the EPA ignored the ongoing progress, speculating that new regulations were necessary to save hundreds of billions of dollars in health care costs. Up to 576 coal-fired power plants may need retrofit to meet the new standards at a cost approaching $120 billion.¶ In February 2012, the EPA finalized the Utility MACT (Maximum Achievable Control Technology), the first ever regulation of power plant emissions of mercury. Jackson announced the rule at the National Children’s Hospital in Washington, D.C., stating that the rule would “protect our children.” While exploiting children in her announcement, she failed to mention that US mercury emissions were down almost 60 percent from the early 1990s and continue to fall. Nor did she mention that natural emissions of mercury from volcanoes, geysers, and deep-sea vents are 100 times larger than emissions from US power plants. If all mercury emissions are halted from US utilities, the effect on children will be too small to detect. But the Electric Reliability Coordinating Council places the regulation cost at up to $100 billion per year.¶ Coal-fired power plants generated 42 percent of US electricity in 2011. More than twenty states receive at least 50 percent of their electricity from coal plants. The destruction of the coal utility industry will boost the price of electricity for consumers and raise the cost of all goods and services that use electricity.¶ Other major EPA regulations have been hastily introduced with high estimated implementation costs, often in conflict with state regulations. Jackson’s team proposed to designate coal ash as a hazardous substance (cost over $50 billion), despite the fact that 40 percent of coal ash is recycled into bricks, drywall, asphalt and cement. The EPA headquarters was built with cement containing coal ash. The EPA issued a rule to regulate emissions from industrial boilers, at a cost of tens of billions of dollars. The EPA and the Department of Transportation established new vehicle mileage requirements, boosting automobile standards from today’s 26 miles per gallon to 54.5 mpg by the year 2025 (bye-bye minivan). Regulation of hydraulic fracturing of natural gas is next on the ever-expanding EPA regulatory plate, despite the fact that fracking is already covered by other state and federal statutes. The EPA even considered regulations on dust emissions from farms.¶ Expected economic losses from EPA regulation are huge. US Gross Domestic Product could be reduced each year, with losses peaking at $500 billion by 2030. Employment could drop by 2.5 million jobs. Household incomes could decline by $1,200 annually. Low income families, with utility costs a higher share of the household budget, would be hit hardest.¶ The United States has some of the cleanest air and water in the world, both much improved during the last 50 years. The greatest air pollution risk to the average citizen is smoke from their fireplace or campfire. Suppose we step back from the Jackson path of destruction and re-establish common sense in our environmental policy?

Second is Natural Gas

Market Trends Are Pushing Towards an Overreliance on Natural Gas – Maintaining Coal Production is Key to Energy Diversity

AEP believes that it is not prudent for EPA, or any other agency, to adopt federal policies that foreclose the use of coal in the future development of baseload generation. Locking exclusively into new natural gas baseload generation over the long term could increase an over reliance on natural gas for power generation to the detriment of the economy. Rather, maintaining fuel diversity through a balanced portfolio of energy resources that includes coal has been a successful strategy in providing abundant, reliable, low-cost electricity to power the nation’s economic growth and high standard of living. The continued reliance on a diverse portfolio of fuels is clearly the wisest course of action to safeguard against the risk of market price fluctuations of natural gas or any of our energy resources over the long-term. By contrast, foreclosing the option to use of coal over the long-term could burden U.S. consumers with additional and unnecessary costs as U.S. energy providers replace retiring older generation sources and try to keep up with rising demand over the coming years. Further, as EGUs begin to rely more heavily on a single fuel source for electric generation, we run the risk that the energy prices will become increasingly volatile over the long term, with implications for the entire economy.